I think you make some good points. But this part stuck out to me a bit:
You are deciding where to build both a pharmacy and bakery (assume corresponding foot traffic uplift from the other is 0). Under the SQ, you build them next to each other such that you can maximally capture the land value increase of the other. Under LVT, you build them maximally apart to reduce your land value tax burden. The increased land value you obtained under SQ that was partially captured by you is now a cost being bourne out as inconvenience to the public under LVT.
It seems to me that in reality, the effect of business attracting customers to other nearby businesses (through foot traffic, more people moving into the area, incentivizing more transport nearby, etc) is very much nonzero and might cover the whole LVT increase.
That said, I agree that LVT is a nonobvious thing and might be off target from what we really want. The real problem is making sure there’s enough low-income housing in cities, it’s better to just solve that directly.
I’ve always been a bit confused by “low-income housing’. Is the plan to make the housing cheap via price capping? Won’t that have the usual economic issues and cause demand to continue to outstrip supply forever and ever? Is the plan to make the houses ugly as fuck so that they will cost less than the pretty houses nearby? That won’t really work; people will rent a closet for $1000/mo in SF sometimes.
I think you make some good points. But this part stuck out to me a bit:
It seems to me that in reality, the effect of business attracting customers to other nearby businesses (through foot traffic, more people moving into the area, incentivizing more transport nearby, etc) is very much nonzero and might cover the whole LVT increase.
That said, I agree that LVT is a nonobvious thing and might be off target from what we really want. The real problem is making sure there’s enough low-income housing in cities, it’s better to just solve that directly.
I’ve always been a bit confused by “low-income housing’. Is the plan to make the housing cheap via price capping? Won’t that have the usual economic issues and cause demand to continue to outstrip supply forever and ever? Is the plan to make the houses ugly as fuck so that they will cost less than the pretty houses nearby? That won’t really work; people will rent a closet for $1000/mo in SF sometimes.
It could be owned by the government and rented out for cheap, but only if the renter uses it as primary residence. Or it could be means-tested.